The best tokenization crypto will eventually enjoy massive adoption and could very well become a top 5 crypto, by market cap. For this reason, investors are beginning to pay more and more attention to tokenization cryptos. The question is which crypto will stand above all the others in the quest for asset tokenization? Which is the best tokenization crypto?
What is Asset Tokenization?
Asset tokenization is the process of creating digital tokens that represent real world assets. These tokens are created on the blockchain and can be transferred peer to peer, similarly to how cryptocurrency transactions take place.
What is the purpose of asset tokenization?
Once an asset has been tokenized it can be transferred peer to peer and/or it can be traded at a marketplace. In addition, asset tokenization can be utilized to provide fractional ownership of an asset.
For example, an investor may chose to tokenize an apartment complex and sell tokens representing fractional ownership of said asset. The investor may or may not issue dividends to distribute income from the apartment complex to token holders.
This provides liquidity to the investor tokenizing the asset and to token holders.
How Big Will The Asset Tokenization Market Be?
The asset tokenization market will be huge! First, let’s re-state the fact that nearly all assets will eventually be tokenized. We are talking about trillions, possibly over a quadrillion dollars! The size of this market is beyond human comprehension. This market includes things like art, real estate, stocks and derivatives.
Which Is The Best Crypto for Tokenization
Some of of the possible cryptocurrency contenders include Algorand, Cardano, Etherum, Polygon, Ravencoin, Tezos, etc. However, the best crypto for tokenization is likely to be a truly decentralized (POW) protocol that can handle assets in the simplest possible manner. Having researched this, I believe that the best crypto for tokenization is Ravencoin.
It is very likely users will rely on various blockchains. Some of these may be private, public, decentralized, centralized, etc. Some will rely on POS, others on POW. Some will utilize smart contracts, some won’t need smart contracts.
This begs the question, what key features will users seek when tokenizing assets? Here are three characteristics I believe are necessary for a blockchain protocol to become the best tokenization crypto:
- POW & Decentralized over POS & Centralized
- Simple over Complex (smart contracts)
- Fairly Launched over ICO
Decentralized Vs Centralized Protocols
If I am tokenizing anything of value, I’d want the assurance that no central entity can change the rules and mess with my asset. The only way to ensure this is with a truly decentralized blockchain. And the only way to attain this is with POW mining.
Therefore, the best tokenization crypto must be a crypto that utilizes POW mining. Proof of Stake (POS) cryptos are very popular these days, but the reality is these cryptos are centralized rather than decentralized and therefore they are not as secure. Most importantly, I believe POS cryptos won’t survive in the long run.
Base Layer Vs Smart Contracts
The KISS (Keep It Simple Stupid) concept comes to mind.
Allow me to illustrate this with an analogy; If you want to perform simple arithmetic computations, do you use a calculator or do you create a program every time you need to perform such computations? Indeed, everybody uses a calculator, because a calculator was designed for the specific purpose of performing simple arithmetic computations.
Likewise, if you want to tokenize assets, you could either use a blockchain protocol that was already designed to handle asset tokenization at the base layer, or you could write a smart contract, which requires writing code. The former is a simple solution, the latter is a complex solution.
Crypto enthusiasts are excited about the endless uses for smart contracts. Indeed, smart contracts can provide excellent solutions in a number of ways. Unfortunately, smart contracts are complex and therefore introduce significant vulnerabilities.
See 9 Most Common Smart Contract Vulnerabilities, which include:
- Indirect execution of unknown code
- Reentrancy
- Incorrect calculation of the output token amount
- Interface / naming issues
- Dependency on the order of execution
- Time component
- Using the blockhash function
- Incorrectly handled exceptions
- Incorrect work with ERC20 token
Fairly Launched Vs ICOs
We all know the SEC has signaled its intent to closely regulate the crypto industry. It is evident that cryptos that had ICOs are at risk of being deemed illegal securities.
Imagine that a company like eBay decides to enter the asset tokenization space. Would eBay want to take a chance of utilizing a cryptocurrency that is at risk of being deemed an illegal security?
Also consider that crypto exchanges, such as Binance, Coinbase, Craken, and Gemini, are not allowed to trade securities. These exchanges would be forced to delist many cryptos when the SEC hammers cryptos that had ICOs.
Which Cryptocurrencies Meet These Top 3 Characteristics?
I’ve been researching this for a while and can only find one cryptocurrency that provides the three features discussed above. That is Ravencoin, which by the way has an amazingly engaged community. See ‘Why Ravencoin Will Flourish for Years to Come‘ by Samuel J. Saches from STM.
See also The Battle of The Ages:
In conclusion, I believe the best tokenization crypto is Ravencoin. If you know of other cryptos that meet the criteria discussed above, or if you’d like to share your thoughts on the best crypto for asset tokenization, please comment below.